Insurance...why we need it

♠ Posted by Anju Satyal in College and University at 2:33 PM

Human life is full of risks and uncertainty. Each and every step of life is full of risks. We cannot eliminate risk. However, we can make provision for financial security against risk. Insurance is the means to get financial security against risk. Insurance is a way of reducing uncertainty of occurrence of an event. Insurance is an investment, from which we get return only when certain loss occurred from predetermined incident.

Insurance has wide scope and area nowadays. So there is no single definition of insurance. Insurance can be defined from the viewpoints of several disciplines. The definition of insurance cane be expressed from the viewpoints of law, economics, history, sociology and risk theory. However, it is better to define the insurance from common viewpoint. Some of the most important definitions are presented below: • “Insurance is a promise by an insurer to an insured protection or service”

A.H. Mowbray and R.H. Blanchard • “Insurance is simply a co-operative form of distributing a certain risk over a group of persons exposed to it” M.K. Ghosh & A.N.Agrawal • “Insurance may be defined as a social device providing compensation for the effects of misfortune, the payment being made from accumulated contribution of all parties participating in the scheme.” D.S. Hansel • “Insurance is a contract by which one party for compensation called premium assumes particular risk of the other party and promise to pay to him or his nominee a certain sum of money on a specified contingency.” Edwin W. Peterson • “Insurance is a contract in which a sum of money is paid by insured in consideration of the insurer’s incurring the risk of paying a large sum when the given contingency arise. Tindal